Benchmarks extend southward journey for the fifth straight day

Volatility ruled the roost as key domestic benchmarks once again ended the volatile day of trade in the red terrain extending their losing streak for the fifth consecutive session on Tuesday. The frontline indices, after a positive start, entered into the negative territory and even went on to test important psychological 20,650 (Sensex) and 6,150 (Nifty) levels. The key gauges got solid support around those intraday low levels as they convalesced from thereon. The indices tried hard to move back into the positive territory and even got there in last leg of trade but only for a brief period, as investors took the opportunity to cash in on the bounce back in dying hours of trade. Also investors remained on sidelines ahead of macro-economic data and third quarter corporate earnings due later in the week. Selling by foreign institutional investors (FIIs) too impacted market sentiments. FIIs sold shares worth a net Rs 318.91 crore on January 6, 2014.

On the global front, European markets traded with traction in early deals after data showed retail sales in Germany rose more-than-expected in November by a seasonally adjusted 1.5%, beating expectations for a 0.6% rise. Also, in France, consumer confidence in December gained more than projected to 85 from 84 the prior month. Moreover, Asian pacific counters ended mixed as investors opted cautious approach ahead of China’s economic prospects report and also awaiting economic events in the US with Federal Reserve minutes due Wednesday and a monthly jobs report on Friday.

Back home, investors remained concerned on the SBI’s internal report, that the revised FY’2011-12 gross domestic product (GDP) growth is likely to fall to 6 percent on account of a slump in manufacturing led by weak demand and difficulty in accessing funds. The first revised estimate of GDP for FY’12 was 6.2 percent and the second revised estimate for FY'12 is scheduled to be released on January 31. Some pessimism also came in from currency front as Indian rupee was at 62.37 per dollar at the time of equity markets closing versus its previous close of 62.31 per dollar, tracking largely steady regional stock markets.

Meanwhile, shares of telecom companies like, Idea Cellular, Bharti Airtel and Reliance Communication edged lower with court ruling, allowing the Comptroller & Auditor General (CAG) to audit books of accounts of private telecom companies. Additionally, software and technology counters too remained under pressure after weaker-than-expected US services-sector data.

The NSE’s 50-share broadly followed index Nifty slipped by around thirty points to below its psychological 6,200 level, while Bombay Stock Exchange’s sensitive Index -- Sensex dropped by around hundred points to end below the psychological 20,700 mark.

Broader markets too struggled to get some traction during the session and ended the day’s trade mixed. However, the market breadth remained in favour of advances, as there were 1,285 shares on the gaining side against 1,249 shares on the losing side, while 145 shares remained unchanged.

Finally, the BSE Sensex plunged by 94.06 points or 0.45%, to settle at 20693.24, while the CNX Nifty lost 29.20 points or 0.47% to settle at 6,162.25.

The BSE Sensex touched a high and a low of 20890.48 and 20637.18, respectively. The BSE Mid cap index was down by 0.38%, while the Small cap index gained 0.36%.

The top gainers on the Sensex were Maruti Suzuki up 2.18%, Gail India up 1.09%, Sun Pharma up 0.95%, ICICI Bank up 0.89%, and Bharti Airtel up 0.87%, on the flip side Tata Steel down 3.29%, Tata Power down 2.87%, SSLT down 1.86%, Hindalco Inds down 1.86%, and NTPC down by 1.78%,were the top losers on the index.

On the BSE Sectoral front Capital Goods up by 0.49%, Consumer Durables up by 0.21%, Healthcare up by 0.12%, and Auto up by 0.09%, were the only gainers, while Metal down by 1.68%, Realty down by 1.65%, Oil & Gas down by 1.37%, Power down by 1.30%, and IT down by 1.29%, were the top losers on the sectoral front.

Meanwhile, industry chamber FICCI has unveiled its Economic Agenda for long term growth to bring the economy back to a sustained high growth path. FICCI has underlined the need to strengthen key triggers of growth of enterprises and job creations, as adding 10-12 million jobs annually would require a growth of 8-9% over a long period.

FICCI President Sidharth Birla highlighted that three key tangible macroeconomic indicators such as fiscal deficit, current account deficit and inflation have a bearing on investor perception. Regarding the fiscal deficit, S Birla has stressed that planned capital expenditure should not be compromised for revenue spending. Noting that social spending is a short-term measure for job creation, FICCI President stressed that it is imperative to link social spending to asset creation and skill building to overcome the problem like job creation.

Referring to India’s CAD, the FICCI President underscored that CAD must be brought down and policy interventions are needed to curb imports of natural resources which are available domestically. Furthermore, comprehensive plans for manufacturing competitiveness are also required, he added. Amid declining FDI in the country, India's dependence on FIIs is considerable, therefore, deepening of domestic capital markets is the only lasting solution to improve resilience for unforeseen events. Agricultural production and productivity must be raised to check food prices in order to tackle high inflation, WPI inflation surged to a 14-month high of 7.52 percent in the month of November. Moreover, to improve the business sentiments in the country, FICCI has expressed the need for clarity in policy formulation, time-bound and transparent implementation of policies with minimal discretion and greater certainty in legislative interpretation.

The CNX Nifty touched a high and low of 6,221.50 and 6,144.75 respectively.

The top gainers on the Nifty were Maruti Suzuki India up by 2.28%, IndusInd Bank up by 1.60%, Mahindra & Mahindra up by 1.29%, Sun Pharmaceuticals Industries up by 1.01%, and ICICI Bank up by 0.94%, On the other hand, Tata Steel down by 3.75%, Bank of Baroda down by 3.32%, Tata Power Company down by 2.63%, Sesa Sterlite down by 2.51%, and BPCL down by 2.24%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.44%, Germany's DAX was up by 0.61%, and United Kingdom's FTSE 100 was up by 0.46%.

The Asian markets concluded Tuesday’s trade on a mixed note, as the region recovered from a bruising start to the year, though yen strength continued to weigh on Japanese shares. China’s dismal start of the year comes amid disappointing economic data relating to activity in both manufacturing and services, compounded by the resumption of domestic initial public offerings. More economic data are on the way from China, with trade numbers due on Wednesday and inflation figures on Thursday. New home purchases in Shanghai fell for the second week but the average price continued to rise amid robust sales in the mid- to high-end sector. Sales of new homes, excluding government-subsidized affordable housing, shed 7.5 percent last week to 222,500 square meters.

Indonesia’s rupiah fell to the lowest level since 2008 on concern a foreign-currency shortage in local markets will worsen as the Federal Reserve cuts stimulus. Indonesia posted a narrower budget deficit last year as the government spent less than targeted, giving a break on Southeast Asia’s largest economy amid declining exports and slowing investment. The nation recorded for 2013 a budget deficit of Rp 209.5 trillion ($17 billion), or 2.2 percent of gross domestic product, compared to 2.4 percent of GDP as targeted in last year’s revised state budget. Taiwanese CPI fell to a seasonally adjusted annual rate of 0.33%, from 0.67% in the preceding quarter while the country’s Trade Balance fell to a seasonally adjusted annual rate of 1.41B, from 3.51B in the preceding month.